I took my lumps on the short calls.

Discussion in 'Options' started by KINGOFSHORTS, Apr 14, 2010.

  1. But the short put profits made up for the short call losses :) Not as much as I wanted but better safe than sorry. Closed out short puts short calls.

    Hey Geico has to pay out claims every so often.

    Took a loss on the short calls, but I had plenty of premium made in the short puts to offset the call losses.

    Anyhow rule of Options, always hedge and have spare chutes as well and of course understand the greeks so you understand the risk profile and can work out scenarios for hedging positions and re hedging.

    Rules of Options.
    #1 Dont get greedy.
    #2 Take action quickly when risk thresholds rise.
    #3 Document mistakes and lessons learned.
  2. ptrjon


    you can lose your shorts, just don't lose your shirt!
  3. so you are the one who pushed put/call ratio to the lowest level in 4 years today.
  4. yeah, look at that ratio. I was watching it and decided to take the rest of the day off.
  5. Premiums on those calls jumped 12% when I checked again later during the day.
  6. Yeah I have some OTM put backspreads on and I noticed the spread came in a little right at the close.
  7. I did the same. Has an Iron Butterfly working in April using the ES. Took the profit on the short puts and took the loss on the short calls/long calls. Even got some money back on the long puts. Best part, I used long ES futures to further hedge and cahsed them out with a slight profit (reverse gamma scalp). Like one said, better to be profitable than greedy. Now, looking at the May Iron Butterfly. If the underlying takes off again, I can actually add enough long ES to make the IB look like a bull put spread or just keep it delta neutral with a slight bullish tendancy. Too bad we don't know what the market will do--LOL.
  8. For the iron butterflies - one thing I frequently do is buy back some of the middle shorts. This helps with both your delta, gamma, and generally locks in some profit. If I were 20-10/10/-20, and if we're in a bull run I would go to 20-10/9-20 or even 20-10/8-21.

    Futures are also great, but normally tend to wait until the last week or two of the trade to use these in place of an option where I can better adjust my theta curve.
  9. Actually the last couple of cycles have been cruel...

    I did the maths, and this cycle (expiring tomorrow) basically screwed you up and down, left and right.

    I made a profit this cycle, but very very little (1.0%) and this next cycle I am tending around 1.5%.

    The only thing that saved my arse are my other option plays. I do currencies, indicies (eg SPX, NDX, RUT, DJX, etc), and commodities.

    This cycle coming up is not any friendlier. What bothers the f**k out of me are the bid ask spreads. On the indicies they are absolutely killer! In the past I would split the bid and ask and get filled, but no NO takers. I have even had to leg into the spreads individually to get my fills. It is bugging me to no ends. Hence it appears this upcoming cycle I am going to be taking it a bit easier on the indicies.

    We need some panic to smarten people up ;).

    Regarding taking action quickly. I typically take action 11 times out of 12, which in hindsight proved to be DUMB. However, and I lived through it in March, that 1 time would have cleaned me out. I know it cleaned somebody else out to the tune of loosing 70% of the account value. I on the other hand took a 3.5% loss. QUITE A DIFFERENCE...


  10. I have a strong Risk management procedures and process. I am more than willing to leave money on the table any time my risk thresholds are getting close enough that I consider it time to close out positions. I am always evaluating for risk on a daily basis and keeping notes on the situation,re hedging as needed. You do not want an LTCM situation :)

    For example Those calls I took my lumps on, have increased in value 29.629% If I would have waited hoping for a comeback, instead of closing out with a small profit, I would have ended up closing with a much much smaller profit or potential losses if it kept going up fast.

    One set of contracts I closed a while back (short calls, are up over 100% since I closed them out at break even)
    Never get upset about leaving money in the table, yes maybe this time those Call prices will collapse and I probably closed out the short puts a bit too soon but I prefer making reasonable good money VS trying to over stay my welcome and lose money.

    To me I treat Options as an Insurance company actuary would treat the business. Primary #1 Rule is always protect your capital and franchise.

    There have been enough times where I close out positions to take my profits, only to see that I could have taken more profits if I waited. But I never

    I generated quite a bit of volume yesterday

    Anyhow I enjoy the Business, its a great way to work out you Brain and keep it healthy.

    Things I would never do. Roll forward losing positions, or positions of increasing risk. Or double down on either as well.
    #10     Apr 15, 2010